Steady as she goes

Economic growth in P.E.I. is expected to remain steady this year with real GDP growth forecast to match the estimated 2013 rate of 1.4 per cent.

Those projections are contained in the latest RBC Economics’ provincial outlook for Atlantic Canada.

“A strong tourism season and robust international exports are expected to support steady economic growth in P.E.I. this year,” said Craig Wright, senior vice-president and chief economist, RBC. “However, lower capital investment and lingering weakness across domestic economic sectors are expected to temper overall performance.”

Wright said this week indications of a strong tourism season are already emerging, as events scheduled for the 150th anniversary of the 1864 Charlottetown Conference are expected to boost the number of visitors to the province.

That bodes well for accommodation and food services hiring, but overall employment growth in the province is expected to be subdued as an easing in public-sector hiring weighs down continued private-sector job gains.

Wright said that after reaching record levels in 2013, P.E.I. exports surged in early 2014 as a weakening Canadian currency and strengthening global demand supported further gains.

Potato and seafood exports to the U.S. were robust while softer sales in the U.S. for the province’s aerospace and organic chemical products were more than offset by rising sales to France.

Wright said long-term potential exists for further gains in the flow of international merchandise goods, with the gradual elimination of tariffs under the South Korean trade agreement and the agreement-in-principle with the European Union.

The RBC’s economic outlook also addressed provincial government spending, noting that

the spring budget maintained a return to surplus in 2015-16, with greater fiscal restraint planned as program expenditures are set to decline across most departments.

“Capital investment is also set to fall this year following the completion of the $60-million Hermanville wind farm in 2013.”

On the domestic side, RBC noted that population growth in the province edged higher to start 2014 after slowing to a six-year low in 2013.

Gains were concentrated in the 65 and older age category with further declines across the working-age category.

These shifting demographics, RBC says, may be weighing on demand for housing, with the six-month trend falling sharply since January 2013.

Addressing the whole of Atlantic Canada, RBC says the region is positioned for moderate economic growth, led by accelerated activity in Nova Scotia and New Brunswick.